North Florida Housing Market Cooling Off, Dampering Region’s Economic Outlook

Thanks in large part to a slowing North Florida housing market, that part of the Sunshine State could be in for a disappointing holiday sales season economically, some forecasters predict.

In Pensacola speaking to a roundtable of area economists and local SunTrust bankers, analyst Greg Miller said he “suspects it will be an unfortunate Christmas” for many because of low inventory and high expectations from consumers of steep price discounts on gift items.

“One of the processes making consumers worse off,” Miller noted, “is the lack of inventory among retailers.”

Taking a generally pessimistic view, Miller also noted that the Florida real estate market and the national economy are in the midst of a big slowdown, and may be headed toward recession.

“The national economy is in the process of gearing down. We’re living it now. We saw in March that the economy was not going to sustain itself at a 5 percent growth rate,” said Miller.

Even with consumer confidence strong, the nation’s economic growth rate now is hovering at an anemic 1.5 percent. Leading this broad slowdown is the housing market, currently undergoing a wrenching contraction coupled with massive pressure on home prices.

He predicted the housing market could see a price correction approaching 35 percent in some areas. Uncertain Florida mortgage rates and staggeringly high median home prices have led many in the Sunshine State — particularly in the southern half — to wonder not if, but when this is going to hit.

The hardest hit sector of the housing market will probably be high-end investment condos, which may face a severe price corrections.

“The investor side of the condominium market could be in for some bad news,” he said.

To make matters worse, investors are pulling money out of real estate and putting it in cash and the stock market. On the positive side, however, sales of “lower-end” housing — in the $200,000-300,000 range — are starting to pick up, a good sign for both home builders and realtors.

Miller’s predictions led University of West Florida economist Rick Harper to ask whether the residential housing market is shifting away from high-growth coastal areas in Florida to inland developments in North Carolina and Tennessee. That’s good news for those seeking affordable housing in a region that offers relatively little of it.

A South Florida native, Miller has witnessed several big-time housing corrections in Florida over the past several decades, and in every case, investors returned to coastal properties in even greater numbers than before. Residential property is still an attractive investment, so don’t look for Florida home mortgage loan demand to fade over the long run.